In recent months, energy producers and traders have made repeated bets on natural gas prices, which go up and down like a roller coaster and remain uncertain. Now that the first cold spell is coming, there is no doubt that demand for natural gas will increase, putting more pressure on energy-hungry Europe.

According to the weather company, the temperature in Europe will start to drop next week, and the temperature in parts of Italy will be 2 degrees lower than usual. Southern France, Spain and Germany are also colder than usual. British energy supplier Centrica has warned its 9 million customers to be prepared for six weeks of snow and ice.

Due to the impact of the energy crisis, European natural gas stocks are now near an all-time low and will be extremely sensitive to weather such as cold snaps in the coming months. Natural gas prices rose for the second week in a row in November after surging to record levels in October.

In the current weather conditions, the additional supply promised by Russia is negligible, while Norway's natural gas flow has also been reduced by pipeline repairs.

Tyler Roys, director of AccuWeather Europe, said:

Energy supply across Europe will face unprecedented pressure.

Extreme weather pushes up gas prices

Marex senior research analyst and meteorologist Carlo Cafaro said that due to the existence of high-pressure air masses in central and southern Europe, colder air is expected by the end of the month. And further pointed out thatIn the next two weeks, the number of heating days (a measure of demand) will be higher than the average of the past 10 years.

Although European natural gas prices have fallen from all-time highs, they are more than four times higher than in previous years.Dutch natural gas futures, the benchmark for TTF, rose 1.4% on Monday and 14% in the last week.

At the same time, Roys pointed out that low temperatures in southern Europe and stormy weather in the Mediterranean could cause floods and landslides. Wind power generation is expected to fluctuate greatly or lead to a bigger rise in natural gas prices.

Accuweather data show that while overall temperatures are still likely to be close to normal in November, they are lower than the average of the past four years, which will affect natural gas inventory levels.

In addition, last Sunday Goldman Sachs Group analyst Samantha Dart pointed out in a report that from the current weather forecast, TTF futures prices will begin to rebound. Specifically, despite the increase in natural gas shipments from Russia to Europe, in terms of the overall delivery scale, the future TTF futures price will rise from US $25 per million British thermal units to US $30 per million British thermal units, and the JKM futures price will rise to 32 US dollars per million British thermal units.

Goldman Sachs Group report further pointed out that the Yamal pipeline reservation announced by Gazprom on November 15 is expected to be 45 million b / d, while the reservation to be announced on December 21 may change significantly. If the booking volume approaches the seasonal normal value of 75 million b / d, the supply is relatively increased, and it is expected that the price of TTF futures in the first quarter of 2022 will fall to US $17.60 per million British thermal units.